Hall Family Properties, Ltd. v. Gosnell Development Corp.
| Citation | 185 Ariz. 382,916 P.2d 1098 |
| Decision Date | 24 October 1995 |
| Docket Number | No. 1,CA-CV,1 |
| Parties | HALL FAMILY PROPERTIES, LTD., an Arizona limited partnership and a limited partner of Mary Ellen Properties Limited Partnership, on its own behalf and in the right of Mary Ellen Properties Limited Partnerships, an Arizona limited partnership, Plaintiff-Appellee, v. GOSNELL DEVELOPMENT CORPORATION, an Arizona corporation and the general partner of Mary Ellen Properties Limited Partnership and of Clock Tower Properties Limited Partnership; Robert A. Gosnell, Daniel G. Gosnell and William A. Gosnell, individually and as limited partners of Mary Ellen Properties Limited Partnership, Defendants-Appellants. 93-0241. |
| Court | Court of Appeals of Arizona |
This action arises out of a multi-million dollar dispute between partners in a construction project. After a six-week trial, the jury returned general verdicts and interrogatories that the trial court regarded as inconsistent. When the court proposed that the jury be sent back for more deliberations, Defendants' counsel objected, Plaintiff's counsel moved for a mistrial, and the court discharged the jury and ordered briefing on the motion. Later, the trial court found the verdicts and interrogatories inconsistent and declared a mistrial pursuant to Rule 49(h), Arizona Rules of Civil Procedure. 1
On appeal, Defendants argue for judgment on the verdicts and Plaintiff argues that there is no right to appeal from an order granting a mistrial. We conclude that a Rule 49(h) mistrial order is appealable pursuant to Arizona Revised Statutes Annotated ("A.R.S.") section 12-2101(F)(1)(1994). We also conclude that the trial court did not abuse its discretion in finding that the verdicts and the interrogatories were inconsistent. We therefore deny Plaintiff's motion to dismiss the appeal, affirm the trial court's Rule 49(h) order, and remand for a new trial.
We provide only a skeletal discussion of the facts because they are largely tangential to the issues on appeal and because the trial transcripts are not part of the record on appeal.
The litigants are partners in the Mary Ellen Properties Limited Partnership ("the partnership"). The general partner was Defendant Gosnell Development Corporation ("GDC"). The limited partners were the individual Defendants ("the Gosnell brothers") and Plaintiff Hall Family Properties, Ltd. ("HFP"). HFP had a fifty percent interest in the partnership, GDC had forty percent, and the Gosnell brothers (the sole stockholders and directors of GDC) had ten percent.
In 1986, acting both on its own behalf and as the partnership's general partner, GDC entered into a construction contract to build an office building for the partnership. The agreement provided that GDC would render planning, design, development, and construction services for the building, and that GDC would receive fees in an amount "not in excess of those which would be paid by the Partnership to third parties for comparable services." In the ensuing lawsuit, HFP alleged that GDC breached its contractual and fiduciary duties by overcharging the partnership about $3.2 million for fees and services, and further alleging that the Gosnell brothers had actively participated in the overcharging. HFP also alleged that GDC improperly charged the partnership $442,000 for attorneys' fees incurred by Defendants in this lawsuit. Defendants denied all allegations of wrongdoing and claimed that the partnership was obligated to pay GDC's attorneys' fees pursuant to Paragraph 13.14 of the Partnership Agreement, which provides:
13.14 Indemnification. The Partnership ... shall indemnify, save harmless and pay all judgments and claims against the General Partner, its employees, [etc.] from any liability, loss or damage incurred by them or by the Partnership by reason of any act performed or omitted to be performed by them in connection with the business of the Partnership, including costs and attorneys' fees (which attorneys' fees may be paid as incurred) and any amounts expended in the settlement of any claims of liability, loss, or damage, provided that, if such liability, loss, or claim arises out of any action or inaction of the General Partner, it must first be determined that the General Partner acted in good faith and with the belief that such action was in the best interests of the Partnership, and that such course of conduct did not constitute fraud, negligence, breach of fiduciary duty, or misconduct by the General Partner[.]
HFP requested damages of $5.2 million and was largely, but ambiguously, rejected. The jury found for HFP and against all Defendants, but it awarded zero damages against the Gosnell brothers and damages against GDC for attorneys' fees only, $442,000. (The jury had forms of verdict by which it could have found against HFP and for one or more of the Defendants.) The forms of verdict returned by the jury read as follows:
Verdicts
1. For the plaintiff and against Robert A. Gosnell, awarding damages in the sum of $0.
2. For the plaintiff and against Daniel G. Gosnell, awarding damages in the sum of $ 0.
3. For the plaintiff and against William A. Gosnell, awarding damages in the sum of $ 0.
4. For the plaintiff and against GDC, awarding damages in the sum of $442,000.
The jury also answered seven interrogatories. The first four answers found that GDC did not receive excessive fees from the partnership, but the next three answers found that GDC and the Gosnell brothers had wronged the partnership.
1. The fees GDC received from the partnership for its services as architect and planner of the Clocktower Corporate Centre office building were not in excess of that amount which would be paid by the partnership to third parties for comparable services.
2. The fees GDC received from the partnership for its services as general contractor for the building shell were not in excess of that amount which would be paid by the partnership to third parties for comparable services.
3. The fees GDC received from the partnership for its services as general contractor for the tenant improvements were not in excess of that amount which would be paid by the partnership to third parties for comparable services.
4. The fees GDC received from the partnership for its services as developer were not in excess of that amount which would be paid by the partnership to third parties for comparable services.
5. GDC did not fulfill all of its fiduciary obligations to the partnership.
6. GDC breached the terms of the First Amended Agreement of the limited partnership.
7. There was either a knowing participation or knowledge amounting to acquiescence in GDC's breach of fiduciary duty by the individual defendants, Robert A. Gosnell, Daniel G. Gosnell, and William A. Gosnell.
While the jury was still present, the trial court noted the inconsistencies between the verdicts and interrogatories and conferred with counsel at the bench. The parties now dispute some of what occurred at that unreported conference, but from later, on-the-record comments made by court and counsel, we surmise that the trial court advised that it would not order further deliberations if any counsel objected--and one of Defendants' counsel objected. In hindsight, the objection appears regrettable, and so does the trial court's decision to not order further deliberations despite the objection. Several years later, the litigation is ongoing, the attorneys' fees and the costs are growing, and the prospect of another trial is looming. On the limited facts known to us, it appears that justice would have been better served if the jury had been given an opportunity to reconcile its verdicts with its answers to interrogatories. In that event, the main issue on appeal might be whether judgment should have been entered on the first verdicts or on the second verdicts, and neither party would have to suffer the prospect of a second trial.
In any event, after Defendants objected to further jury deliberations, HFP moved for a mistrial and the trial court discharged the jury and took the motion under advisement. Later, after considering extensive briefing and argument, the trial court granted the motion for mistrial in a minute entry that provided detailed findings and conclusions:
The answers to interrogatories and the general verdicts ... are inconsistent. The answers to special interrogatories indicate that Defendant Gosnell Development Corporation did not fulfill all of its fiduciary obligations to Mary Ellen Properties Limited Partnership and Hall Family Properties and that the individual Defendants Robert A. Gosnell, Daniel G. Gosnell, William A. Gosnell knowingly participated or had knowledge amounting to acquiescence in the breach of fiduciary duty. Further, the answers to special interrogatories indicate that Defendant Gosnell Development Corporation charged customary compensation for its services, including but not limited to its services as exclusive planner, designer, developer and builder. Yet, the jury returned a general verdict in favor of Plaintiff and against the individual Defendants awarding zero (0) damages to Plaintiff and a general verdict in favor of Plaintiff against Gosnell Development Corporation awarding damages in the amount of $442,000.00, which amount represents attorneys' fees incurred and disbursed by Gosnell Development Corporation in defending this action. Further the jury declined to use the form of verdicts that provided for the jury to find in favor of each of the individual Gosnell Defendants and against Plaintiff.
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Paragraph 13.14 [of the Limited Partnership...
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